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Posted:
By:
Bob Buckham
Website: www.best-choice-loans.com
Construction Loans: Great tips that you should know about
There are basically 2 types of construction loans that you should look at. And beware, because there are serious consequences for selecting the wrong type of construction loan which could cost you thousands of dollars.
The first is a short-term construction-only loan which automatically "rolls" into the permanent mortgage when construction is complete. It's important that these two separate loans be treated as a package. If not, you will have to pay additional closing costs, and possibly, requalify for the permanent loan.
The second type is a single long-term permanent mortgage in which the money is paid out as the construction proceeds. Single loan financing is generally the lowest cost, most desirable financing, but you may or may not be able to arrange it. Policies vary, so check additional lenders if the first one doesn't offer this type of financing.
Usually, with both of the types of construction loans mentioned above, they are interest only. That is, you make no payments to principal until construction is complete. The interest rate is typically about 1% to 3% above the lender's Prime Rate at the time the loan is made.
You can get some great rates on construction loans by contacting one of our mortgage lenders listed below under Loans.
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